Pacific Edge soars on US approval

Pacific Edge shares more than doubled in value yesterday on confirmation that the company’s Cxbladder cancer test had been accepted under a key US medical regulation.

The shares jumped from 27c to as high as

68c, and closed at 55c, up 104 per cent and valuing the company at $379.3 million.

The successful standard of care rating from the US Centres for Medicare and Medicaid Services (CMS) means Pacific Edge will be reimbursed at a rate of US$760 per test from the start of this month.

The CMS provides healthcare coverage for all US citizens over 65 and assists coverage for low income earners.

The decision will result in significant cashflow benefits for the Dunedin-based biotech company. CMS testing makes up about 40 per cent of CXbladder testing in the US, the company said in its statement to the NZX.

Andrew Bascand, managing director of Harbour Asset Management — which owns

16.4 per cent of Pacific Edge — estimates that “at the current run rate the CMS approval is worth about $10 million in revenues”.

Pacific Edge said it will now also seek reimbursement for tests that have already been done and invoiced for CMS patients.

Those invoices are worth about US$16.6m, but final reimbursement is typically subject to negotiation.

Chief executive David Darling described the confirmation as a “transformational milestone” for the company.

Darling said the coverage decision is also expected to support demand and positive reimbursement decisions from other healthcare organisations and payers as well.